current account-February

By Kim Soo-yeon

SEOUL, March 28 (Yonhap) -- South Korea's current account surplus widened in February from the previous month as imports declined faster than exports, and a deficit of the service account narrowed, the central bank said Thursday.

The current account surplus reached US$2.71 billion in February, up from a revised $2.33 billion the previous month, according to the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.

The February gain was the largest since November, marking the 13th straight month of a surplus run.

The BOK said that Korea would see the underlying trend of the surplus continue for March on exports of tech products although foreigners' repatriation of dividend gains would sap the income account balance.

"The March surplus may be similar to the February gain," Cho Yong-seung, the director of the BOK's monetary and financial statistics division, said in a press conference.

In March and April, offshore investors usually repatriate dividend payments by Korean companies that close their books in December, crimping the country's income account balance.

The data came amid concerns that the won's ascent is feared to sap Seoul's exports, which account for about 50 percent of the economy.

In February, Korea's goods balance posted a surplus of $2.56 billion, but the gain came as imports fell at a sharper pace than exports.

Japan's aggressive monetary easing has unnerved Korean policymakers as the move is putting downward pressure on the yen, which in turn, makes prices of Korean products more expensive in overseas markets when competing with Japanese rivals.

The won's ascent to the yen eased in February, compared with the previous month, but the yen's weakening trend will have impacts on Korea's overseas shipments with a time lag, analysts say.

On a customs-cleared basis, Korea's exports to Japan declined 17.4 percent on-year to $2.89 billion, as an indication that the yen's weakness might begin to affect the country's outbound shipments.

"It cannot be said that there were no impacts of the weaker yen on Seoul's exports. But it did not affect Korea's current account surplus trend," Cho added.

The service account, which includes outlays by South Koreans on overseas trips, posted a deficit of $461 million last month, smaller than a shortfall of $927.1 million in the previous month.

The primary income account, which tracks wages for foreign workers and dividend payments overseas, logged a surplus of $628.9 million in February, down from a surplus of $968.4 million in January.

Meanwhile, the capital and financial account, covering cross-border investments, posted a net outflow of $3.31 billion last month, compared with a revised net outflow of $958.8 million in January, the central bank said.

In January, the BOK forecast that the yearly current account surplus for 2013 will reach $32 billion. Last year, Korea's current account surplus reached a record high of $43.14 billion.